The perks of being a landlord are well-documented. You get to earn a steady passive income, build equity in your properties, and you can always sell when the time is right and bank big profits.
Top of it all, Chevy Chase, Maryland, is an attractive location for rental property investors. The average rent is $2600 in 2023.
However, to be a successful landlord, you must learn risk management. Your property faces a myriad of risks that you must tackle. Purchasing landlord insurance is one of the best tools for managing these risks.
Read on to learn how you stand to benefit from having a landlord insurance policy.
1. Property Damage
Making repairs to your property is probably your least favorite activity as a landlord. Unfortunately, it's an inevitable part of the job. Whether from wear and tear, blatant damage by a tenant, or factors out of your control like bad weather, repairs will always be needed from time to time.
Repairs cost money. This is where landlord insurance comes in.
Imagine the amount of money you'll spend on repairs if strong windows blow the roof away or a fire burns down the property. In fact, some types of damage can result in total loss of the property.
When you're insured, though, it's your insurer that will handle the repair bill. An important thing to note is that insurers will only pay for covered losses. This usually includes fire, hail, lightning, and water damage.
If your property is at risk of damage from events like vandalism and burglary, you may have to negotiate with your insurer and ensure those events are covered as well.
2. Liability Protection
Landlords can be held liable when injuries occur on their property. This is because you have a legal duty to ensure the property is safe and healthy for the people who use it.
As an example, let's say a tenant falls down the stairs and hurts their back. If the staircase needed repairs that you hadn't made, the tenant may file a lawsuit against you and the courts might find you negligent. You'll be required to foot their medical bills and compensate them for other losses.
There are several other instances where an injury can occur on your property and your bank account will be on the line. The good news is that with rental property insurance that offers liability coverage, your insurer will pay the claimants.
3. Loss of Rental Income
You'll lose the ability to earn rent for your property if it's not occupied. Landlord insurance can compensate you for that, but only in certain circumstances.
A good example is when weather damage renders the property inhabitable. Until the property is restored to a habitable condition, your insurer will replace the rental income you've lost.
Some policies may offer this coverage in cases where the property is occupied by a rent-delinquent tenant. However, this will be for a limited time, usually until the eviction process is complete.
Landlord Insurance Is a Must-Have
Your Chevy Chase rental is a prized asset, but it can also be a source of frustration and financial losses. Landlord insurance may not completely shield you from every misfortune, but it will minimize your financial losses in many situations as described above.
Another handy risk management strategy is to hire a property management professional. PMI Chevy Chase, a local property management company that's part of a franchise that's been in the business for over 20 years, stands ready to manage your rental.
Give us a call to learn more!